Let’s Talk Obamacare – Part 1

Financial Planning and the Impact of the Affordable Health Care Act on Individuals Working at a Large Employer

The Affordable Care Act (ACA) – also known as Obamacare – has been in effect for over three years now, but many of its key provisions are just now being implemented. Of key importance is the mandate that all Americans must have health care insurance by 2014. For the remainder of this year, many Americans will need to decide what type of health care insurance they will buy, and where they will get it. Their decision will depend primarily on where they work and whether they now have existing health care coverage.

Accordingly, I will talk about the impacts of ACA on consumers in three separate blog posts, each one covering a distinct consumer group defined by its employment status and their current health care coverage. Let’s define these groups as: 1) those who work for large companies offering a health care plan; 2) those who work for small companies (i.e., fewer than 50 employees) or who are self-employed and buy individual insurance; and 3) those who are uninsured. This week’s blog will address group 1, with groups 2 and 3 to follow in later blog installments.

So, what can an employee in a large company expect to happen to his or her health care coverage under ACA in 2014?

For the most part, choosing your insurance coverage for 2014 will seem more or less like “business as usual.” During your enrollment period—likely to be taking place now or in the fall—you will again be allowed to keep or change your plan options. You will have to make the usual trade-off between more medical benefits for higher premiums, or less coverage for lower premiums. Your health and that of your family will determine what makes most sense from a cost-benefit standpoint.

You will see (or already have seen) some additional benefits in your policy, such as:

No more limits on lifetime expenses

An array of preventive services that are now free

Mandated caps on out-of-pocket expenses

Policy holders may also be eligible for a rebate of premium, if the plan premiums spent on medical services is below a specified amount. (This will be great incentive to get you and your work mates to eat more salads at lunch and go to the gym!)

Don’t be surprised, however, if plan premiums have increase by approximately 3–9 percent. Your share of the premium is likely to go up as well. Many employers are shifting more of the insurance costs to their employees, although the extent to which they can do this is limited by ACA. Your premium should remain below 9.5 percent of your income; otherwise your employer may incur penalties.

You may also find that your HR department is giving you more information on the benefits of high deductible policies as a way to contain your premiums and allow you to qualify for a Health Savings Account, which works like an IRA in terms of tax savings. Be sure to ascertain whether your spouse or partner will still be covered in 2014. Dropping spousal coverage is one way employers can cut the costs of ACA compliance, but according to the International Foundation of Employee Benefit Plans, most large companies do not intend to resort to this measure.

It’s extremely unlikely that your employer will discontinue your coverage. Again, large employers can be penalized if they do not make coverage available to their full-time employees. And although the Obama administration recently announced that those penalties will not go into effect for large firms until 2015, it is unlikely that this delay will induce large firms to disband their employee medical coverage. Most large employers are convinced that offering good medical coverage is a competitive necessity to attract and retain good workers. Now that the economy is beginning to percolate, this becomes even more imperative.

Finally, expect to see more communications from your employer about your health care plan. If you haven’t yet, you’ll soon be hearing about the new health insurance exchanges that will be opening for business in 2014 in each state. These exchanges will be online marketplaces, offering consumers four standard levels of health care coverage provided by one or more providers.

Assuming you plan to stay with your large company, you probably will not be using these exchanges for your health care. But listen carefully anyway: you may have an unemployed relative or friend, or you yourself may one day be unemployed or self-employed, and these exchanges will become much more important to you in providing continued coverage for health costs.

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